Debt limit overtaking shutdown as U.S. crisis focus

House Speaker John Boehner of Ohio arrives on Capitol Hill in Washington, Monday, Oct. 7, 2013. The Republican-controlled House and the Democrat-controlled Senate are at an impasse, neither side backing down, after House GOP conservatives linked the funding bill to President Obama's existent health care law. (AP Photo/J. Scott Applewhite)

Specilaist Fabian Caceres works on the floor of the New York Stock Exchange Monday, Oct. 7, 2013. The stock market is opening sharply lower as the U.S. government heads into a second week of a partial shutdown with no signs of a budget agreement in sight. (AP Photo/Richard Drew)

Rep. Louie Gohmert, R-Texas, escorts a group of constituents through the Capitol Rotunda during a lull in activity in the House of Representatives, Monday, Oct. 7, 2013, in Washington. The government partially shut down last week amid Washington gridlock and faces a make-or-break deadline later this month about the nation's borrowing power. (AP Photo/J. Scott Applewhite)

A procession of boats are towed up the Las Vegas Strip protesting the closure of the Lake Mead National Recreation Area on Sunday, Oct. 6, 2013. Several dozen boaters joined together to peacefully cruise from Tropicana to Sahara avenues as an expression of their frustrations to Congress with the continual government shutdown causing the closure all national parks including Lake Mead. (AP Photo/Las Vegas Review-Journal, David Becker)

A possible national default loomed closer yesterday as the partial government shutdown lingered, rattling markets in the United States and overseas. A gridlocked Congress betrayed little or no urgency toward resolving either of the threats.

Stocks got a case of the jitters on Wall Street, and halfway around the world, China stressed the importance for the international economy of raising the U.S. debt limit.

“Safeguarding the debt is of vital importance to the economy of the U.S. and the world,” Vice Finance Minister Zhu Guangyao said, according to the official Xinhua News Agency. China holds $1.277 trillion in U.S. Treasury bonds, second only to Japan.

At home, the political rhetoric was unchanged – and generally uncompromising – while a new poll suggested Republicans are paying a heavier price than Democrats for the deadlock.

President Obama said the House should vote immediately on ending the partial closure of the federal establishment. He accused House Speaker John Boehner of refusing to permit the necessary legislation to come to the floor because he “doesn’t apparently want to see the . . . shutdown end at the moment, unless he’s able to extract concessions that don’t have anything to do with the budget.”

Boehner, in rebuttal, called on Obama to agree to negotiations on changes in the nation’s health care overhaul and steps to curb deficits, the principal GOP demands for ending the shutdown and eliminating the threat of default.

“Really, Mr. President. It’s time to have that conversation before our economy is put further at risk,” the Ohio Republican said in remarks on the House floor.

Obama said he would talk with the Republicans on those topics or virtually any others. But the White House has said repeatedly the president will not negotiate until the government is fully re-opened and the debt limit has been raised to stave off the nation’s first-ever default.

White House aide Jason Furman told reporters that if Boehner “needs to have some talking point for his caucus that’s consistent with us not negotiating . . . that’s not adding a bunch of extraneous conditions, of course he’s welcome to figure out whatever talking point he wants that helps him sell something.”

The current standoff is the latest in a string of clashes over the past three years between Obama and a House Republican majority that has steered to the right with the rise of the Tea Party.

Most Democrats and many Republicans have assumed the GOP will pay a heavier price for a shutdown than the Democrats, since that was the case in 1996.

And a Washington Post-ABC survey said disapproval of Republicans was measured at 70 percent, up from 63 percent a week earlier. Disapproval of Obama’s role was statistically unchanged at 51 percent.

In the Senate, where majority Democrats forced approval of legislation before the shutdown aimed at preventing it, officials said Majority Leader Harry Reid was drafting a bill to raise the $16.7 trillion debt ceiling before the Oct. 17 deadline when Treasury Secretary Jacob Lew has said the government will reach its borrowing limit.

The measure would allow the government to meet its borrowing needs through the 2014 elections, officials said, although few details were immediately available.

Assuming Democratic support, the bill could pass the Senate quickly if Republicans merely vote against it as they press for concessions from the White House. But passage could be delayed until Oct. 17 if the GOP decides to mount a filibuster.

Separately, a White House aide said Obama would be receptive to an interim, short-term measure to prevent default.

In the House, Republicans declined to say when they would put debt limit legislation on the floor for a vote.

Instead, the public agenda for the day consisted of legislation to reopen the Food and Drug Administration, the latest in a string of measures to soften the impact of the partial shutdown. The measure was approved, 235-162.

Earlier House-passed bills would end the shutdown at national parks, the National Guard and Reserves and the Women, Infants and Children nutrition program, and ease effects for the Washington, D.C., government, among other locations. Each of the measures cleared the House with some Democratic support.

Yet each is under a veto threat by the White House, and Reid opposes them in the Senate as far less than the full restoration of government services that most Democrats favor.

Still, the shutdown eased over the weekend, when about 350,000 civilian defense workers were recalled as the result of legislation Congress passed and Obama signed after the shutdown began.

That left an estimated 450,000 federal employees idle at agencies responsible for domestic programs, ranging from the Departments of Education to Energy, and including Labor, Health and Human Services, Interior, Transportation and more.

The shutdown was felt unevenly, however, because of bewilderingly complex rules and the ability of senior officials to declare some projects essential and therefore allowed to remain open.

Some routine food checks by the FDA were suspended, but the Department of Agriculture’s meat inspections continued uninterrupted. Much of the nation’s space agency was shuttered, although work continued on plans to launch a robotic probe to Mars, which has a once-every-two-years launch window.

Despite the order returning civilian Pentagon workers to their government jobs, defense contractor Lockheed Martin announced it would furlough about 2,400.

The Federal Emergency Management Agency, where Obama visited, served as a demonstration for the variable impact of the partial shutdown.

Officials said the agency had furloughed about 86 percent of its workers, then had recalled about 200 of them last week to prepare for the threat posed by Tropical Storm Karen in the Gulf Coast region.

With the threat passed, Obama said at least 100 of them have been re-furloughed.

“That’s no way of doing business,” he said.

Whatever the shutdown’s inconveniences, it was easily rivaled by the warnings over a default, in which the U.S. would not be able to pay all its bills.

“A default would be unprecedented and has the potential to be catastrophic,” a Treasury report said. “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world.”

Private economists generally agree that a default on the U.S. debt would be extremely harmful, especially if the impasse was not resolved quickly.

Lew has said that while Treasury expects to have $30 billion of cash on hand Oct. 17, that money would be quickly exhausted in paying incoming bills given that the government’s payments can run up to $60 billion on a single day.

This extremest Republican party is playing with the lives of most Americans. The article and recent votes clearly show this entire game they are playing has nothing to do with budget money. You can't claim it is and then agree to pay "back-pay" to all those not working and start recalling dept. after dept.. As they continue this course, drive down the stock market, raise interest rates and drop individuals incomes, they will fulfill their true goal of showing ObamaCare will cost more. If no other way than through lost income. One can like ObamaCare or not but this is not the way to fight this fight. 70% disapproval of republican party and they think they are helping themselves. The extremist and poor leadership are driving more from the Republican party.

BestPresidentReagan wrote:

10/08/2013

To be informed readers should know that the Responsible Republicans passed the "Full Faith & Credit Act". the debt & deficit democrats in the senate wont even bring it to the floor as it blows away their political rhetoric. The bill would prevent the federal government from defaulting by mandating that the Treasury pay the nation's debts even after the debt ceiling is reached. There is enough federal revenue to cover those costs. - See more at: http://www.breitbart.com/Big-Government/2013/10/05/Full-Faith-and-Credit-Act-House-Republicans-Trump-Card#sthash.A6VjW8Ls.dpuf

Jim... wrote:

10/09/2013

By your link, the "Full Faith & Credit Act" allows the government to shut down, put a million or more out of work (except Congress of course) but just guarantees the investors (bond holders) will never skip making a penny...... How about a different bill that says if the budget is due on Oct 1, if there is no budget passed 45 days prior to that date Congress forfeits their pay and benefits "until" an agreement is made. That way they feel the pain of their inaction's before the average citizen does. They rarely do anything until the last moment, back up that moment in time for them.